Class action success deemed unlikely

by Ben Abbott18 Jan 2012

Any class action from disgruntled mortgage borrowers under the NCCP has been deemed unlikely to succeed.

Earlier this week, Fairfax newspapers revealed a class action involving a potential 300,000 borrowers was being levelled at major banks, amid claims their lending practices had put customers at risk.

The class action, if mounted, would focus on first homebuyers and lower income households lured into the market by lower interest rates following the onset of the GFC and now struggling to repay.

Speaking with Australian BrokerNews, MFAA CEO Phil Naylor said while detail remains sketchy, it would be difficult to see such an action succeed under the newly implemented NCCP regime.

Naylor said the regime itself requires lenders and brokers to only lend or recommend products that are not unsuitable.

"I would be surprised if it could be established that either lenders or brokers involved in such a large number of loans would have not acted ‘responsibly’ as required under NCCP," he said.

The class action will allege that some of these borrowers are experiencing severe financial hardship through no fault of their own, through being allowed to enter a loan contract that they could not afford.

The case is being spearheaded by retired international insurance broker Roger Brown, according to Fairfax, who has been quoted as saying the way banks have been lending has been "irresponsible".


  • by Carol Taylor-Denning 18/01/2012 10:33:39 AM

    What I have found is that it can sometimes be consumer debt that can place some people in financial hardship. Credit cards have been up sold and bundled by many insitutions like getting fries with your burger.

  • by Keith Bridges 18/01/2012 12:15:55 PM

    An International Insurance broker telling the world of irresponsible lending practices!. Somehow I don't think borrowers' have to take responsibility and ownership for their decisions.

  • by Skolot 18/01/2012 12:29:26 PM

    I believe that the only irresponsible part of lending I could think of is Credit Card cross sell. I specifically outlined few times not to offer any credit cards but banks would still do it. At the same time some borrowers must accept responsibility, at all aspects of their lives not just banking. I am sick and tired of people blaming everyone but not themselves, “stupid” police, banks, government, you name it.